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Reliance Industries Q2 results preview: Jio, Retail likely to drive bumper net profit, O2C biz to be muted

Mukesh Ambani’s Reliance Industries Ltd is expected to post a robust earnings growth for the July-September quarter, helped by Reliance Jio telecom’s operating profit, a rise in ARPU (Average Revenue Per User), and strong retail sales. Analysts project Reliance Industries to report a net profit jump ranging 10-40% on-year for the fiscal second quarter, to […]

Reliance Industries Q2 results preview: Jio, Retail likely to drive bumper net profit, O2C biz to be muted

Mukesh Ambani’s Reliance Industries Ltd is expected to post a robust earnings growth for the July-September quarter, helped by Reliance Jio telecom’s operating profit, a rise in ARPU (Average Revenue Per User), and strong retail sales. Analysts project Reliance Industries to report a net profit jump ranging 10-40% on-year for the fiscal second quarter, to as much as Rs 21,500 crore. A likely muted performance of RIL’s O2C (Oil-to-chemicals) business, due to subdued petrochemicals demand, is expected to be cushioned by a healthy growth in gross refining margins.

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EBITDA to grow on-year, but decline sequentially

Reliance Industries Ltd’s EBITDA (Earnings before interest, taxes, depreciation, and amortisation) is expected to reflect double digit growth on-year. However, quarterly estimates suggest a substantial decline triggered by the O2C business reporting reduced numbers. “We anticipate roughly 21 per cent on-year growth in RIL EBITDA (down 17 per cent on-quarter) largely driven by strong ONG, retail and telecom division offset by subdued O2C. We expect O2C EBITDA to decline 6% YoY on subdued petchem, offset by modest refining,” said analysts at Nuvama (formerly Edelweiss).

Kotak Institutional Equities expects a 30 per cent on-year growth for EBITDA, and has projected an on-quarter decline of 11 per cent. “We expect consolidated EBITDA decline 11% qoq due to sharp weakness in O2C only partly offset by Jio and Retail,” Kotak analysts said. Kotak analysts also attributed the EBITDA decline as an impact of export taxes.

Jio and Retail to aid Reliance Industries’ growth

Nuvama expects Jio’s EBITDA to surge 28 per cent on-year. Meanwhile, the retail sector is likely to remain strong, registering a 50 per cent on-year growth in EBITDA. “Retail EBITDA is likely to remain strong on higher footfalls. Jio’s EBITDA is likely to surge on high ARPU offset by YoY flat subscriber base,” they said. IDBI capital also credited the telecom and retail segment for the continued growth of the conglomerate. “We expect RIL to report strong earnings backed by higher refining and petchem margins, Jio’s operating profit growth on account of likely ARPU increase and robust performance in the retail segment.”

Net revenue, EBITDA, and net profit projections

Nuvama

Net Revenue: Rs 2,08,832.9 crore, up 24.6% (on-year)
EBITDA: Rs 31,586.4 crore, up 21.4% (on-year)
Net Profit: Rs 15,155.9 crore, up 10.8% (on-year)

Kotak Institutional Equities

Net Revenue: Rs 2,41,004.4 crore, 44% (on-year)
EBITDA: Rs 33, 783.7 crore, 30% (on-year)
Net Profit: Rs 17,484 crore, 28% (on-year)

IDBI Capital

Net Revenue: Rs 2,45,313 crore, 46.4% (on-year)
EBITDA: Rs 35,425.2 crore, 36.1% (on-year)
Net Profit: Rs 21,504.3 crore, 38.9% (on-year)

Elara Capital

Net Revenue: Rs 2,07,688.6 crore, 23.9% (on-year)
EBITDA: Rs 30,717.2 crore, 18.1% (on-year)
Net Profit: Rs 15,556.4 crore, 0.5% (on-year)

While the RIL stock has fallen more than 5 per cent over the last six months, it soared 1.75% on Wednesday, closing at Rs 2,493.9 on NSE.

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First published on: 19-10-2022 at 18:36 IST